Global postal downturn will leave letterboxes feeling lonely

Stephen Cauchi

Even as it loses hundreds of millions of dollars on everyday mail services, Australia Post's situation is not unique in the developed world.

The volume of letters in western countries, thanks to email and the internet, has been in steep decline for nearly a decade and the increased parcels business from online shopping isn't making up the shortfall.

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The $US67 billion Postal Service in the US had a proud history of six-days-a-week mail service but has endured shocking losses – $US5 billion in 2013, $US38 billion overall since 2007.

It tried to end Saturday delivery in 2013 but was, for the meantime, blocked by Congress from doing so. Door-to-door mail delivery, which is responsible for about half of the annual deficit, is also likely to go.

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These measures may initially restore profitability but studies estimate that mail volume, and revenue, will continue to fall. ''More households will likely receive no mail on any given day,'' the US postal regulator, the Office of the Inspector General said recently. ''It is unlikely that the demand for mail delivery will ever return to previous levels.''

Consequently, even more radical cutbacks are being mooted. A three-day-a-week schedule, according to the OIG, would save the US Postal Service $US10 billion a year.

''Some homes could receive mail on Monday, Wednesday and Friday, others on Tuesday, Thursday and Saturday,'' it said. ''Delivery would still occur six days a week to post office boxes.''

If that sounds radical in theory, New Zealand is about to make it happen in practice. New Zealand Post Group made a profit of $NZ121 million in 2012-13, but that came from the Group's banking and courier arms.

''The traditional letters mail business effectively just broke even, and that was with extremely tight cost management,'' said New Zealand Post. From July 2015, New Zealand Post will not be obliged to deliver mail in cities on more than three days per week, five days per week in country areas. It was six for both.

The picture is rosier elsewhere. In China, mail deliveries have increased by 75 per cent since 2007. Canada and Sweden still deliver five days a week. Elsewhere in Europe, postal services like Austria Post, Deutsche Post, Belgium's Bpost and Britain's Royal Mail all enjoy solid profitability.

The Royal Mail delivers letters throughout Britain six days a week and is required to do so by its universal service obligation until 2021. Any change prior to that would have to be put to parliamentary vote.

But even the Royal Mail is doubtful about the long-term viability of delivering letters, numbers of which fell from 82 million in 2004 to 58 million in 2013.

CEO Moya Greene warned last month that competitors such as TNT were cherry-picking the profitable parts of the Royal Mail's business. This in turn, she said, threatened the Royal Mail's ability to deliver letters to rural locations like the Scottish islands. Royal Mail's share price fell 7 per cent on her comments.

Australia Post cannot escape the worldwide trends. Not only will it employ fewer workers, it will most likely be making fewer stops per week at your letterbox.